Bitcoin’s sharp drawdowns are difficult to time, because the asset lacks traditional valuation metrics, making risk mitigation more important than market timing.
HBTC uses options on Bitcoin-adjacent assets to construct long Bitcoin-related exposure with a built-in collar structure designed to limit downside.
A significant Bitcoin selloff may actually be a compelling time to consider HBTC, because the hedge is already embedded. There’s no need to buy hedges after volatility spikes.
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When Bitcoin drops 30% or more in a single week, or 50% over six months, investors tend to panic. That reaction is understandable. Bitcoin doesn’t come with the valuation anchors that traditional assets do. There’s no earnings multiple to reference, no dividend yield to fall back on. When Bitcoin sells off, the question isn’t “is it cheap now?” it’s “at what point do buyers start to return?”.
That uncertainty is exactly why the Fortuna Hedged Bitcoin ETF (NYSE: HBTC) was built the way it was.
Unlike equities or bonds, Bitcoin lacks widely-used and commonly scrutinized fundamental valuation metrics like price-to-earnings ratio or book value. And although many think of Bitcoin as an alternative currency, the usual suite of relative value indicators are less useful than they would be when comparing USD versus other traditional currencies. This makes sharp drawdowns especially disorienting for investors and the asset class especially challenging to buy into during periods of stress.
Rather than trying to time the bottom, HBTC takes a different approach: aiming to manage the risk of being in the trade at all times, so that sharp drawdowns become manageable rather than catastrophic.
HBTC does not directly hold Bitcoin. Instead, the fund uses options on Bitcoin-adjacent securities designed to construct a 1x long exposure to Bitcoin-related price movements.
Around that long exposure, the PMs apply an options strategy designed to hedge the downside without missing the upside opportunity when the asset inevitably reverses and trades toward the upside again. Specifically:
• Protective put options are purchased to provide a floor against significant losses.
• Call spreads are sold to help offset the cost of those puts.
This combination, often called an uncapped collar structure, allows the fund to participate meaningfully in Bitcoin’s upside while seeking to limit how much investors lose when Bitcoin sells off hard. The options positions in HBTC are repositioned monthly, allowing the strategy to stay aligned with current market conditions.
This might be one of the more counterintuitive ideas in the Fortuna approach: a sharp Bitcoin drawdown may actually be a compelling time to consider an investment in HBTC specifically – not just Bitcoin broadly.
After a significant selloff, options implied volatility tends to spike. That elevated volatility typically makes buying puts more expensive, which is why many hedging strategies are prohibitively costly to implement in real time. HBTC, because it uses a collar structure that offsets put costs with call spread premium, is designed to remain cost-efficient even in volatile markets. The hedge is already embedded in the fund. For advisors and investors who might be waiting for an entry point into Bitcoin-related exposure, HBTC could provide a way to participate in any recovery while maintaining a structured downside cushion.
HBTC is an actively managed ETF, with an experienced portfolio manager at the helm. Mark Adams, CIO and Co-Founder of Fortuna Funds, has more than 20 years of professional options trading experience. HBTC applies institutional options techniques within an ETF structure, and makes this expert-level options strategy accessible through owning a single ETF within standard brokerage accounts.
Bitcoin’s volatility isn’t going away. Sharp drawdowns are part of its historical character. For advisors who want to offer clients Bitcoin-related exposure without requiring them to simply absorb that volatility, HBTC is designed to be a different kind of answer.
Not a bet on Bitcoin. A strategy built around it.
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